FDI in Retail will be Disaster for the Indian market

FDI in Retail will be Disaster for the Indian market

 In the wake of unprecedented haste on the part of the Union Commerce Minister Shri Anand Sharma advocating immediate need of allowing FDI in Retail, the Confederation of All India Traders (CAIT) has demanded release of a White Paper as to why the Country needs FDI in Retail. The repeated statements of Shri Sharma and others in the Government in recent days smacks of some kind of pressure on the Govt. Let, the Commerce Minister make people aware of the pressures-asked CAIT. CAIT National President Mr. B. C. Bhartia and Secretary General Mr. Praveen Khandelwal said that the decision to allow FDI in multi-brand retail is going to be a disaster for the Indian consumer, farmer and the country for many reasons. The retail business in the West is ample evidence of this.Wherever big foreign retailers have entered, they have caused havoc. In Mexico, the share of Walmart in total retail is close to 50%. One single retailer dominates this country with a population of 110 mn. Mexico is economically a vassal state. In Thailand, the foreign retailers caused 30% of local shops to close in 10 years. If such a scale of disruption happens in India, even in the big cities, millions will be rendered jobless with no other option of livelihood for them.   They further said that the retail structure in India is a multi-faceted one with high degree of choice. This is essential to keep consumer prices at the lowest level possible. The Retail structure in the West is one of concentration and domination. In the UK only three retailers control 63% of the market. In most countries, a handful of retail chains control the bulk of the market.Big retail chains are not good for consumers as they are known to have very high mark ups. For everyday items like food and grocery, western retail chains charge a mark-up of between 40% to 100% which varies by type of merchandise.Big retail chains will not be good for the farmer, who will become captive to them. As big chains consolidate and get bigger and bigger, they exercise their monopolistic power to squeeze the farmer. This is the main reason why in the OECD countries the farmers receive enormous subsidy from their governments. Big retail will cause local shops and street vendors to go out of business. These shops will find sourcing difficult. The big retailers will engage in predatory pricing which the local shops cannot compete with. Large scale unemployment and closure of retailers will be the result-said CAIT.   Both Mr. Bhartia and Mr. Khandelwal said that Foreign retailers are coming to take over an existing market. They are not going to cause an increase in consumption. The result will be mass scale displacement of the existing players. In other cases of FDI, new markets and new categories were created. In the case of FDI in retail, this is entirely a game of displacement. This will result in terrible consequences for the average Indian. Big corporate foreign retailers are not good for the lakhs of small road transporters of India. The corporatization through big foreign retail will mean that the trade will shift to corporate fleets and large scale fleet owners. This will render a large section of the small road transporters redundant, forcing them out of their livelihood.